Posted by Sheila Shayon on April 7, 2010 11:02 AM
AOL is selling, or shutting down, Bebo, the networking site it bought in 2008 – for $850 million.
A recent internal AOL memo summed it up: “It is clear that social networking is a space with heavy competition, and where scale defines success. Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space."
When AOL purchased Bebo it was a popular British site, but it never got a grip in the US, entering the fray of social media as it was powerfully on the rise.
“The social networking landscape has definitely changed over the past year or two. Social networking audiences have increasingly consolidated around Facebook, which has made the competitive environment increasingly challenging,” says Andrew Lipsman, of comScore.
Facebook’s rapid expansion and dominance in social networking has set the bar impossibly high for competitors. Bebo attracted 12.8 million uniques in February – down 45 percent from 2009. Facebook – increased unique visitors 68 percent to a high of 462 million, according to comScore.
AOL has been struggling for years, beginning with its merger with Time Warner. However it particularly floundered during the subsequent years when the merged company never achieved synergy or strategic compatibility, and most recently, broke off from Time Warner altogether.
Yet there is good news in that AOL has recognized the faulty business enterprise of Bebo, and decided to prevent further loss by pulling out. So hope springs eternal as AOL tries to reinvent itself once again – for there is certainly more to come.